Beruflich Dokumente
Kultur Dokumente
of
the
Philippines
SUPREME
COURT
Manila
THIRD
DIVISION
G.R.
No.
116123
March
13,
1997
SERGIO
F.
NAGUIAT,
doing
business
under
the
name
and
style
SERGIO
F.
NAGUIAT
ENT.,
INC.,
&
CLARK
FIELD
TAXI,
INC.,
petitioners,
vs.
NATIONAL
LABOR
RELATIONS
COMMISSION
(THIRD
DIVISION),
NATIONAL
ORGANIZATION
OF
WORKINGMEN
and
its
members,
LEONARDO
T.
GALANG,
et
al.,
respondents.
D
E
C
I
S
I
O
N
PANGANIBAN,
J.:
Are
private
respondent-employees
of
petitioner
Clark
Field
Taxi,
Inc.,
who
were
separated
from
service
due
the
closure
of
Clark
Air
Base,
entitled
to
separation
pay
and,
if
so,
in
what
amount?
Are
officers
of
corporations
ipso
facto
liable
jointly
and
severally
with
the
companies
they
represent
for
the
payment
of
separation
pay?
These
questions
are
answered
by
the
Court
in
resolving
this
petition
for
certiorari
under
Rule
65
of
the
Rules
of
Court
assailing
the
Resolutions
of
the
National
Labor
Relations
Commission
(Third
1
2
3
Division)
promulgated
on
February
28,
1994,
and
May
31,
1994.
The
February
28,
1994
4
Resolution
affirmed
with
modifications
the
decision
of
Labor
Arbiter
Ariel
C.
Santos
in
NLRC
Case
No.
RAB-III-12-2477-91.
The
second
Resolution
denied
the
motion
for
reconsideration
of
herein
petitioners.
The
NLRC
modified
the
decision
of
the
labor
arbiter
by
granting
separation
pay
to
herein
individual
respondents
in
the
increased
amount
of
US$120.00
for
every
year
of
service
or
its
peso
equivalent,
and
holding
Sergio
F.
Naguiat
Enterprises,
Inc.,
Sergio
F.
Naguiat
and
Antolin
T.
Naguiat,
jointly
and
severally
liable
with
Clark
Field
Taxi,
Inc.
(CFTI).
The
Facts
The
following
facts
are
derived
from
the
records
of
the
case:
Petitioner
CFTI
held
a
concessionaires
contract
with
the
Army
Air
Force
Exchange
Services
(AAFES)
for
the
operation
of
taxi
services
within
Clark
Air
Base.
Sergio
F.
Naguiat
was
CFTIs
president,
while
Antolin
T.
Naguiat
was
its
vice-president.
Like
Sergio
F.
Naguiat
Enterprises,
Incorporated
(Naguiat
Enterprises),
a
trading
firm,
it
was
a
family-owned
corporation.
Individual
respondents
were
previously
employed
by
CFTI
as
taxicab
drivers.
During
their
employment,
they
were
required
to
pay
a
daily
boundary
fee
in
the
amount
of
US$26.50
for
those
working
from
1:00
a.m.
to
12:00
noon,
and
US$27.00
for
those
working
from
12:00
noon
to
12:00
midnight.
All
incidental
expenses
for
the
maintenance
of
the
vehicles
they
were
driving
were
accounted
against
them,
including
gasoline
expenses.
The
drivers
worked
at
least
three
to
four
times
a
week,
depending
on
the
availability
of
taxicabs.
They
earned
not
less
than
US$15.00
daily.
In
excess
of
that
amount,
however,
they
were
required
to
make
cash
deposits
to
the
company,
which
they
could
later
withdraw
every
fifteen
days.
Due
to
the
phase-out
of
the
US
military
bases
in
the
Philippines,
from
which
Clark
Air
Base
was
not
spared,
the
AAFES
was
dissolved,
and
the
services
of
individual
respondents
were
officially
terminated
on
November
26,
1991.
The
AAFES
Taxi
Drivers
Association
(drivers
union),
through
its
local
president,
Eduardo
Castillo,
and
CFTI
held
negotiations
as
regards
separation
benefits
that
should
be
awarded
in
favor
of
the
drivers.
They
arrived
at
an
agreement
that
the
separated
drivers
will
be
given
P500.00
for
every
year
of
service
as
severance
pay.
Most
of
the
drivers
accepted
said
amount
in
December
1991
and
January
1992.
However,
individual
respondents
herein
refused
to
accept
theirs.
Instead,
after
disaffiliating
themselves
from
the
drivers
union,
individual
respondents,
through
the
National
Organization
of
Workingmen
(NOWM),
a
labor
organization
which
they
subsequently
5
joined,
filed
a
complaint against
Sergio
F.
Naguiat
doing
business
under
the
name
and
style
Sergio
F.
Naguiat
Enterprises,
Inc.,
Army-Air
Force
Exchange
Services
(AAFES)
with
Mark
Hooper
as
Area
Service
Manager,
Pacific
Region,
and
AAFES
Taxi
Drivers
Association
with
Eduardo
Castillo
as
President,
for
payment
of
separation
pay
due
to
termination/phase-out.
Said
complaint
was
later
6
amended
to
include
additional
taxi
drivers
who
were
similarly
situated
as
complainants,
and
CFTI
with
Antolin
T.
Naguiat
as
vice
president
and
general
manager,
as
party
respondent.
In
their
complaint,
herein
private
respondents
alleged
that
they
were
regular
employees
of
Naguiat
Enterprises,
although
their
individual
applications
for
employment
were
approved
by
CFTI.
They
claimed
to
have
been
assigned
to
Naguiat
Enterprises
after
having
been
hired
by
CFTI,
and
that
the
former
thence
managed,
controlled
and
supervised
their
employment.
They
averred
further
that
they
were
entitled
to
separation
pay
based
on
their
latest
daily
earnings
of
US$15.00
for
working
sixteen
(16)
days
a
month.
In
their
position
paper
submitted
to
the
labor
arbiter,
herein
petitioners
claimed
that
the
cessation
of
business
of
CFTI
on
November
26,
1991,
was
due
to
great
financial
losses
and
lost
business
opportunity
resulting
from
the
phase-out
of
Clark
Air
Base
brought
about
by
the
Mt.
Pinatubo
eruption
and
the
expiration
of
the
RP-US
military
bases
agreement.
They
admitted
that
CFTI
had
agreed
with
the
drivers
union,
through
its
President
Eduardo
Castillo
who
claimed
to
have
had
blanket
authority
to
negotiate
with
CFTI
in
behalf
of
union
members,
to
grant
its
taxi
driver-
employees
separation
pay
equivalent
to
P500.00
for
every
year
of
service.
The
labor
arbiter,
finding
the
individual
complainants
to
be
regular
workers
of
CFTI,
ordered
the
latter
to
pay
them
P1,200.00
for
every
year
of
service
for
humanitarian
consideration,
setting
aside
the
earlier
agreement
between
CFTI
and
the
drivers
union
of
P500.00
for
every
year
of
service.
The
labor
arbiter
rejected
the
allegation
of
CFTI
that
it
was
forced
to
close
business
due
to
great
financial
losses
and
lost
business
opportunity
since,
at
the
time
it
ceased
operations,
CFTI
was
profitably
earning
and
the
cessation
of
its
business
was
due
to
the
untimely
closure
of
Clark
Air
Base.
In
not
awarding
separation
pay
in
accordance
with
the
Labor
Code,
the
labor
arbiter
explained:
To
allow
respondents
exemption
from
its
(sic)
obligation
to
pay
separation
pay
would
be
inhuman
to
complainants
but
to
impose
a
monetary
obligation
to
an
employer
whose
profitable
business
was
7
abruptly
shot
(sic)
down
by
force
majeure
would
be
unfair
and
unjust
to
say
the
least.
and
thus,
simply
awarded
an
amount
for
humanitarian
consideration.
Herein
individual
private
respondents
appealed
to
the
NLRC.
In
its
Resolution,
the
NLRC
modified
the
decision
of
the
labor
arbiter
by
granting
separation
pay
to
the
private
respondents.
The
concluding
paragraphs
of
the
NLRC
Resolution
read:
The
contention
of
complainant
is
partly
correct.
One-half
month
salary
should
be
US$120.00
but
this
amount
can
not
be
paid
to
the
complainant
in
U.S.
Dollar
which
is
not
the
legal
tender
in
the
Philippines.
Paras,
in
commenting
on
Art.
1249
of
the
New
Civil
Code,
defines
legal
tender
as
that
which
a
debtor
may
compel
a
creditor
to
accept
in
payment
of
the
debt.
The
complainants
who
are
the
creditors
in
this
instance
can
be
compelled
to
accept
the
Philippine
peso
which
is
the
legal
tender,
in
which
case,
the
table
of
conversion
(exchange
rate)
at
the
time
of
payment
or
satisfaction
of
the
judgment
should
be
used.
However,
since
the
choice
is
left
to
the
debtor,
(respondents)
they
may
choose
to
pay
in
US
dollar.
(Phoenix
Assurance
Co.
vs.
Macondray
&
Co.
Inc.,
L-25048,
May
13,
1975)
In
discharging
the
above
obligations,
Sergio
F.
Naguiat
Enterprises,
which
is
headed
by
Sergio
F.
Naguiat
and
Antolin
Naguiat,
father
and
son
at
the
same
time
the
President
and
Vice-President
and
General
Manager,
respectively,
should
be
joined
as
indispensable
party
whose
liability
is
joint
and
8
several.
(Sec.
7,
Rule
3,
Rules
of
Court)
As
mentioned
earlier,
the
motion
for
reconsideration
of
herein
petitioners
was
denied
by
the
NLRC.
Hence,
this
petition
with
prayer
for
issuance
of
a
temporary
restraining
order.
Upon
posting
by
the
9
petitioners
of
a
surety
bond,
a
temporary
restraining
order
was
issued
by
this
Court
enjoining
execution
of
the
assailed
Resolutions.
Issues
The
petitioners
raise
the
following
issues
before
this
Court
for
resolution:
I.
Whether
or
not
public
respondent
NLRC
(3rd
Div.)
committed
grave
abuse
of
discretion
amounting
to
lack
of
jurisdiction
in
issuing
the
appealed
resolution;
II.
Whether
or
not
Messrs.
Teofilo
Rafols
and
Romeo
N.
Lopez
could
validly
represent
herein
private
respondents;
and,
10
III.
Whether
or
not
the
resolution
issued
by
public
respondent
is
contrary
to
law.
11
Petitioners
also
submit
two
additional
issues
by
way
of
a
supplement
to
their
petition,
to
wit:
that
Petitioners
Sergio
F.
Naguiat
and
Antolin
Naguiat
were
denied
due
process;
and
that
petitioners
were
not
furnished
copies
of
private
respondents
appeal
to
the
NLRC.
As
to
the
procedural
lapse
of
insufficient
copies
of
the
appeal,
the
proper
forum
before
which
petitioners
should
have
raised
it
is
the
NLRC.
They,
however,
failed
to
question
this
in
their
motion
for
reconsideration.
As
a
consequence,
they
are
deemed
to
have
waived
the
same
and
voluntarily
submitted
themselves
to
the
jurisdiction
of
the
appellate
body.
Anent
the
first
issue
raised
in
their
original
petition,
petitioners
contend
that
NLRC
committed
grave
abuse
of
discretion
amounting
to
lack
or
excess
of
jurisdiction
in
unilaterally
increasing
the
amount
of
severance
pay
granted
by
the
labor
arbiter.
They
claim
that
this
was
not
supported
by
substantial
evidence
since
it
was
based
simply
on
the
self-serving
allegation
of
respondents
that
their
monthly
take-home
pay
was
not
lower
than
$240.00.
On
the
second
issue,
petitioners
aver
that
NOWM
cannot
make
legal
representations
in
behalf
of
individual
respondents
who
should,
instead,
be
bound
by
the
decision
of
the
union
(AAFES
Taxi
Drivers
Association)
of
which
they
were
members.
As
to
the
third
issue,
petitioners
incessantly
insist
that
Sergio
F.
Naguiat
Enterprises,
Inc.
is
a
separate
and
distinct
juridical
entity
which
cannot
be
held
jointly
and
severally
liable
for
the
obligations
of
CFTI.
And
similarly,
Sergio
F.
Naguiat
and
Antolin
Naguiat
were
merely
officers
and
stockholders
of
CFTI
and,
thus,
could
not
be
held
personally
accountable
for
corporate
debts.
Lastly,
Sergio
and
Antolin
Naguiat
assail
the
Resolution
of
NLRC
holding
them
solidarily
liable
despite
not
having
been
impleaded
as
parties
to
the
complaint.
Individual
respondents
filed
a
comment
separate
from
that
of
NOWM.
In
sum,
both
aver
that
petitioners
had
the
opportunity
but
failed
to
refute,
the
taxi
drivers
claim
of
having
an
average
monthly
earning
of
$240.00;
that
individual
respondents
became
members
of
NOWM
after
disaffiliating
themselves
from
the
AAFES
Taxi
Drivers
Association
which,
through
the
manipulations
of
its
President
Eduardo
Castillo,
unconscionably
compromised
their
separation
pay;
and
that
Naguiat
Enterprises,
being
their
indirect
employer,
is
solidarily
liable
under
the
law
for
violation
of
the
Labor
Code,
in
this
case,
for
nonpayment
of
their
separation
pay.
The
Solicitor
General
unqualifiedly
supports
the
allegations
of
private
respondents.
In
addition,
he
submits
that
the
separate
personalities
of
respondent
corporations
and
their
officers
should
be
disregarded
and
considered
one
and
the
same
as
these
were
used
to
perpetrate
injustice
to
their
employees.
The
Courts
Ruling
As
will
be
discussed
below,
the
petition
is
partially
meritorious.
First
Issue:
Amount
of
Separation
Pay
Firmly,
we
reiterate
the
rule
that
in
a
petition
for
certiorari
filed
pursuant
to
Rule
65
of
the
Rules
of
Court,
which
is
the
only
way
a
labor
case
may
reach
the
Supreme
Court,
the
petitioner/s
must
clearly
12
show
that
the
NLRC
acted
without
or
in
excess
of
jurisdiction
or
with
grave
abuse
of
discretion.
Long-standing
and
well-settled
in
Philippine
jurisprudence
is
the
judicial
dictum
that
findings
of
fact
of
administrative
agencies
and
quasi-judicial
bodies,
which
have
acquired
expertise
because
their
jurisdiction
is
confined
to
specific
matters,
are
generally
accorded
not
only
great
respect
but
even
finality;
and
are
binding
upon
this
Court
unless
there
is
a
showing
of
grave
abuse
of
discretion,
or
where
it
is
clearly
shown
that
they
were
arrived
at
arbitrarily
or
in
disregard
of
the
evidence
on
13
record.
Nevertheless,
this
Court
carefully
perused
the
records
of
the
instant
case
if
only
to
determine
whether
public
respondent
committed
grave
abuse
of
discretion,
amounting
to
lack
of
jurisdiction,
in
granting
the
clamor
of
private
respondents
that
their
separation
pay
should
be
based
on
the
amount
of
$240.00,
allegedly
their
minimum
monthly
earnings
as
taxi
drivers
of
petitioners.
In
their
amended
complaint
before
the
Regional
Arbitration
Branch
in
San
Fernando,
Pampanga,
herein
private
respondents
set
forth
in
detail
the
work
schedule
and
financial
arrangement
they
had
with
their
employer.
Therefrom
they
inferred
that
their
monthly
take-home
pay
amounted
to
not
less
than
$240.00.
Herein
petitioners
did
not
bother
to
refute
nor
offer
any
evidence
to
controvert
said
allegations.
Remaining
undisputed,
the
labor
arbiter
adopted
such
facts
in
his
decision.
Petitioners
did
not
even
appeal
from
the
decision
of
the
labor
arbiter
nor
manifest
any
error
in
his
findings
and
conclusions.
Thus,
petitioners
are
in
estoppel
for
not
having
questioned
such
facts
when
they
had
all
opportunity
to
do
so.
Private
respondents,
like
petitioners,
are
bound
by
the
factual
findings
of
Respondent
Commission.
Petitioners
also
claim
that
the
closure
of
their
taxi
business
was
due
to
great
financial
losses
brought
about
by
the
eruption
of
Mt.
Pinatubo
which
made
the
roads
practically
impassable
to
their
taxicabs.
Likewise
well-settled
is
the
rule
that
business
losses
or
financial
reverses,
in
order
to
sustain
retrenchment
of
personnel
or
closure
of
business
and
warrant
exemption
from
payment
of
14
separation
pay,
must
be
proved
with
clear
and
satisfactory
evidence.
The
records,
however,
are
devoid
of
such
evidence.
The
labor
arbiter,
as
affirmed
by
NLRC,
correctly
found
that
petitioners
stopped
their
taxi
business
within
Clark
Air
Base
because
of
the
phase-out
of
U.S.
military
presence
thereat.
It
was
not
due
to
any
great
financial
loss
because
petitioners
taxi
business
was
earning
profitably
at
the
time
of
its
closure.
With
respect
to
the
amount
of
separation
pay
that
should
be
granted,
Article
283
of
the
Labor
Code
provides:
.
.
.
In
case
of
retrenchment
to
prevent
losses
and
in
cases
of
closures
or
cessation
of
operations
of
establishment
or
undertaking
not
due
to
serious
business
losses
or
financial
reverses,
the
separation
pay
shall
be
equivalent
to
one
(1)
month
pay
or
at
least
one-half
(1/2)
month
pay
for
every
year
of
service,
whichever
is
higher.
A
fraction
of
at
least
six
(6)
months
shall
be
considered
one
(1)
whole
year.
Considering
the
above,
we
find
that
NLRC
did
not
commit
grave
abuse
of
discretion
in
ruling
that
15
individual
respondents
were
entitled
to
separation
pay
in
the
amount
$120.00
(one-half
of
$240.00
monthly
pay)
or
its
peso
equivalent
for
every
year
of
service.
Second
Issue:
NOWMs
Personality
to
Represent
Individual
Respondents-Employees
On
the
question
of
NOWMs
authority
to
represent
private
respondents,
we
hold
petitioners
in
estoppel
for
not
having
seasonably
raised
this
issue
before
the
labor
arbiter
or
the
NLRC.
NOWM
was
already
a
party-litigant
as
the
organization
representing
the
taxi
driver-complainants
before
the
labor
arbiter.
But
petitioners
who
were
party-respondents
in
said
complaint
did
not
assail
the
juridical
personality
of
NOWM
and
the
validity
of
its
representations
in
behalf
of
the
complaining
taxi
drivers
before
the
quasi-judicial
bodies.
Therefore,
they
are
now
estopped
from
raising
such
question
before
this
Court.
In
any
event,
petitioners
acknowledged
before
this
Court
that
the
taxi
drivers
allegedly
16
represented
by
NOWM,
are
themselves
parties
in
this
case.
Third
Issue:
Liability
of
Petitioner-Corporations
and
Their
Respective
Officers
The
resolution
of
this
issue
involves
another
factual
finding
that
Naguiat
Enterprises
actually
managed,
supervised
and
controlled
employment
terms
of
the
taxi
drivers,
making
it
their
indirect
employer.
As
adverted
to
earlier,
factual
findings
of
quasi-judicial
bodies
are
binding
upon
the
court
in
the
absence
of
a
showing
of
grave
abuse
of
discretion.
Unfortunately,
the
NLRC
did
not
discuss
or
give
any
explanation
for
holding
Naguiat
Enterprises
and
its
officers
jointly
and
severally
liable
in
discharging
CFTIs
liability
for
payment
of
separation
pay.
We
again
remind
those
concerned
that
decisions,
however
concisely
written,
must
distinctly
and
clearly
17
set
forth
the
facts
and
law
upon
which
they
are
based.
This
rule
applies
as
well
to
dispositions
by
quasi-judicial
and
administrative
bodies.
Naguiat
Enterprise
Not
Liable
In
impleading
Naguiat
Enterprises
as
solidarily
liable
for
the
obligations
of
CFTI,
respondents
rely
on
18
19
20
Articles
106,
107
and
109
of
the
Labor
Code.
Based
on
factual
submissions
of
the
parties,
the
labor
arbiter,
however,
found
that
individual
respondents
were
regular
employees
of
CFTI
who
received
wages
on
a
boundary
or
commission
basis.
We
find
no
reason
to
make
a
contrary
finding.
Labor-only
contracting
exists
where:
(1)
the
person
supplying
workers
to
an
employer
does
not
have
substantial
capital
or
investment
in
the
form
of
tools,
equipment,
machinery,
and
work
premises,
among
others;
and
(2)
the
workers
recruited
and
placed
by
such
person
are
performing
activities
which
are
directly
related
to
the
principal
business
of
21
the
employer.
Independent
contractors,
meanwhile,
are
those
who
exercise
independent
employment,
contracting
to
do
a
piece
of
work
according
to
their
own
methods
without
being
subject
22
to
control
of
their
employer
except
as
to
the
result
of
their
Work.
From
the
evidence
proffered
by
both
parties,
there
is
no
substantial
basis
to
hold
that
Naguiat
Enterprises
is
an
indirect
employer
of
individual
respondents
much
less
a
labor
only
contractor.
On
the
contrary,
petitioners
submitted
documents
such
as
the
drivers
applications
for
employment
with
23
24
25
CFTI,
and
social
security
remittances
and
payroll
of
Naguiat
Enterprises
showing
that
none
of
26
the
individual
respondents
were
its
employees.
Moreover,
in
the
contract
between
CFTI
and
AAFES,
the
former,
as
concessionaire,
agreed
to
purchase
from
AAFES
for
a
certain
amount
within
a
specified
period
a
fleet
of
vehicles
to
be
ke(pt)
on
the
road
by
CFTI,
pursuant
to
their
concessionaires
contract.
This
indicates
that
CFTI
became
the
owner
of
the
taxicabs
which
became
the
principal
investment
and
asset
of
the
company.
Private
respondents
failed
to
substantiate
their
claim
that
Naguiat
Enterprises
managed,
supervised
and
controlled
their
employment.
It
appears
that
they
were
confused
on
the
personalities
of
Sergio
F.
Naguiat
as
an
individual
who
was
the
president
of
CFTI,
and
Sergio
F.
Naguiat
Enterprises,
Inc.,
as
a
separate
corporate
entity
with
a
separate
business.
They
presumed
that
Sergio
F.
Naguiat,
who
was
at
27
the
same
time
a
stockholder
and
director
of
Sergio
F.
Naguiat
Enterprises,
Inc.,
was
managing
and
controlling
the
taxi
business
on
behalf
of
the
latter.
A
closer
scrutiny
and
analysis
of
the
records,
however,
evince
the
truth
of
the
matter:
that
Sergio
F.
Naguiat,
in
supervising
the
taxi
drivers
and
determining
their
employment
terms,
was
rather
carrying
out
his
responsibilities
as
president
of
CFTI.
Hence,
Naguiat
Enterprises
as
a
separate
corporation
does
not
appear
to
be
involved
at
all
in
the
taxi
business.
To
illustrate
further,
we
refer
to
the
testimony
of
a
driver-claimant
on
cross
examination.
Atty.
Suarez
Is
it
not
true
that
you
applied
not
with
Sergio
F.
Naguiat
but
with
Clark
Field
Taxi?
Witness
I
applied
for
(sic)
Sergio
F.
Naguiat.
Atty.
Suarez
Sergio
F.
Naguiat
as
an
individual
or
the
corporation?
Witness
Sergio
F.
Naguiat
na
tao.
Atty.
Suarez
Who
is
Sergio
F.
Naguiat?
Witness
He
is
the
one
managing
the
Sergio
F.
Naguiat
Enterprises
and
he
is
the
one
whom
we
believe
as
our
employer
Atty.
Suarez
What
is
exactly
the
position
of
Sergio
F.
Naguiat
with
the
Sergio
F.
Naguiat
Enterprises?
Witness
He
is
the
owner,
sir.
Atty.
Suarez
How
about
with
Clark
Field
Taxi
Incorporated
what
is
the
position
of
Mr.
Naguiat?
Witness
What
I
know
is
that
he
is
a
concessionaire.
xxx
xxx
xxx
Atty.
Suarez
But
do
you
also
know
that
Sergio
F.
Naguiat
is
the
President
of
Clark
Field
Taxi,
Incorporated?
Witness
Yes,
sir.
Atty.
Suarez
How
about
Mr.
Antolin
Naguiat
what
is
his
role
in
the
taxi
services,
the
operation
of
the
Clark
Field
Taxi,
Incorporated?
Witness
28
In
addition,
the
Constitution
of
CFTI-AAFES
Taxi
Drivers
Association
which,
admittedly,
was
the
union
of
individual
respondents
while
still
working
at
Clark
Air
Base,
states
that
members
thereof
are
the
employees
of
CFTI
and
(f)or
collective
bargaining
purposes,
the
definite
employer
is
the
Clark
Field
Taxi
Inc.
From
the
foregoing,
the
ineludible
conclusion
is
that
CFTI
was
the
actual
and
direct
employer
of
individual
respondents,
and
that
Naguiat
Enterprises
was
neither
their
indirect
employer
nor
labor-
only
contractor.
It
was
not
involved
at
all
in
the
taxi
business.
CFTI
president
solidarily
liable
Petitioner-corporations
would
likewise
want
to
avoid
the
solidary
liability
of
their
officers.
To
bolster
their
position,
Sergio
F.
Naguiat
and
Antolin
T.
Naguiat
specifically
aver
that
they
were
denied
due
32
process
since
they
were
not
parties
to
the
complaint
below.
In
the
broader
interest
of
justice,
we,
however,
hold
that
Sergio
F.
Naguiat,
in
his
capacity
as
president
of
CFTI,
cannot
be
exonerated
from
joint
and
several
liability
in
the
payment
of
separation
pay
to
individual
respondents.
33
A.C.
Ransom
Labor
Union-CCLU
vs.
NLRC
is
the
case
in
point.
A.C.
Ransom
Corporation
was
a
family
corporation,
the
stockholders
of
which
were
members
of
the
Hernandez
family.
In
1973,
it
filed
an
application
for
clearance
to
close
or
cease
operations,
which
was
duly
granted
by
the
Ministry
of
Labor
and
Employment,
without
prejudice
to
the
right
of
employees
to
seek
redress
of
grievance,
if
any.
Backwages
of
22
employees,
who
engaged
in
a
strike
prior
to
the
closure,
were
subsequently
computed
at
P164,984.00.
Up
to
September
1976,
the
union
filed
about
ten
(10)
motions
for
execution
against
the
corporation,
but
none
could
be
implemented,
presumably
for
failure
to
find
leviable
assets
of
said
corporation.
In
its
last
motion
for
execution,
the
union
asked
that
officers
and
agents
of
the
company
be
held
personally
liable
for
payment
of
the
backwages.
This
was
granted
by
the
labor
arbiter.
In
the
corporations
appeal
to
the
NLRC,
one
of
the
issues
raised
was:
Is
the
judgment
against
a
corporation
to
reinstate
its
dismissed
employees
with
backwages,
enforceable
against
its
officer
and
agents,
in
their
individual,
private
and
personal
capacities,
who
were
not
parties
in
the
case
where
the
judgment
was
rendered!
The
NLRC
answered
in
the
negative,
on
the
ground
that
officers
of
a
corporation
are
not
liable
personally
for
official
acts
unless
they
exceeded
the
scope
of
their
authority.
On
certiorari,
this
Court
reversed
the
NLRC
and
upheld
the
labor
arbiter.
In
imposing
joint
and
several
liability
upon
the
company
president,
the
Court,
speaking
through
Mme.
Justice
Ameurfina
Melencio-
Herrera,
ratiocinated
this
wise:
(b)
How
can
the
foregoing
(Articles
265
and
273
of
the
Labor
Code)
provisions
be
implemented
when
the
employer
is
a
corporation?
The
answer
is
found
in
Article
212(c)
of
the
Labor
Code
which
provides:
(c)
Employer
includes
any
person
acting
in
the
interest
of
an
employer,
directly
or
indirectly.
The
term
shall
not
include
any
labor
organization
or
any
of
its
officers
or
agents
except
when
acting
as
employer.
The
foregoing
was
culled
from
Section
2
of
RA
602,
the
Minimum
Wage
Law.
Since
RANSOM
is
an
artificial
person,
it
must
have
an
officer
who
can
be
presumed
to
be
the
employer,
being
the
person
acting
in
the
interest
of
(the)
employer
RANSOM.
The
corporation,
only
in
the
technical
sense,
is
the
employer.
The
responsible
officer
of
an
employer
corporation
can
be
held
personally,
not
to
say
even
criminally,
liable
for
nonpayment
of
back
wages.
That
is
the
policy
of
the
law.
.
.
.
(c)
If
the
policy
of
the
law
were
otherwise,
the
corporation
employer
can
have
devious
ways
for
evading
payment
of
back
wages.
.
.
.
(d)
The
record
does
not
clearly
identify
the
officer
or
officers
of
RANSOM
directly
responsible
for
failure
to
pay
the
back
wages
of
the
22
strikers.
In
the
absence
of
definite
Proof
in
that
regard,
we
believe
it
should
be
presumed
that
the
responsible
officer
is
the
President
of
the
corporation
who
can
be
deemed
the
chief
operation
officer
thereof.
Thus,
in
RA
602,
criminal
responsibility
is
with
the
Manager
or
in
his
default,
the
person
acting
as
such.
In
RANSOM.
the
President
appears
to
be
the
Manager.
(Emphasis
supplied.)
Sergio
F.
Naguiat,
admittedly,
was
the
president
of
CFTI
who
actively
managed
the
business.
Thus,
applying
the
ruling
in
A.C.
Ransom,
he
falls
within
the
meaning
of
an
employer
as
contemplated
by
the
Labor
Code,
who
may
be
held
jointly
and
severally
liable
for
the
obligations
of
the
corporation
to
its
dismissed
employees.
Moreover,
petitioners
also
conceded
that
both
CFTI
and
Naguiat
Enterprises
were
close
family
34
corporations
owned
by
the
Naguiat
family.
Section
100,
paragraph
5,
(under
Title
XII
on
Close
Corporations)
of
the
Corporation
Code,
states:
(5)
To
the
extent
that
the
stockholders
are
actively
engage(d)
in
the
management
or
operation
of
the
business
and
affairs
of
a
close
corporation,
the
stockholders
shall
be
held
to
strict
fiduciary
duties
to
each
other
and
among
themselves.
Said
stockholders
shall
be
personally
liable
for
corporate
torts
unless
the
corporation
has
obtained
reasonably
adequate
liability
insurance.
(emphasis
supplied)
Nothing
in
the
records
show
whether
CFTI
obtained
reasonably
adequate
liability
insurance;
thus,
what
remains
is
to
determine
whether
there
was
corporate
tort.
Our
jurisprudence
is
wanting
as
to
the
definite
scope
of
corporate
tort.
Essentially,
tort
consists
in
35
the
violation
of
a
right
given
or
the
omission
of
a
duty
imposed
by
law.
Simply
stated,
tort
is
a
36
breach
of
a
legal
duty.
Article
283
of
the
Labor
Code
mandates
the
employer
to
grant
separation
pay
to
employees
in
case
of
closure
or
cessation
of
operations
of
establishment
or
undertaking
not
due
to
serious
business
losses
or
financial
reverses,
which
is
the
condition
obtaining
at
bar.
CFTI
failed
to
comply
with
this
law-imposed
duty
or
obligation.
Consequently,
its
stockholder
who
was
actively
engaged
in
the
management
or
operation
of
the
business
should
be
held
personally
liable.
37
Furthermore,
in
MAM
Realty
Development
vs.
NLRC,
the
Court
recognized
that
a
director
or
officer
may
still
be
held
solidarily
liable
with
a
corporation
by
specific
provision
of
law.
Thus:
.
.
.
A
corporation,
being
a
juridical
entity,
may
act
only
through
its
directors,
officers
and
employees.
Obligations
incurred
by
them,
acting
as
such
corporate
agents,
are
not
theirs
but
the
direct
accountabilities
of
the
corporation
they
represent.
True,
solidary
liabilities
may
at
times
be
incurred
but
only
when
exceptional
circumstances
warrant
such
as,
generally,
in
the
following
cases:
xxx
xxx
xxx
4.
When
a
director,
trustee
or
officer
is
made,
by
specific
provision
of
law,
personally
liable
for
his
corporate
action.
(footnotes
omitted)
As
pointed
out
earlier,
the
fifth
paragraph
of
Section
100
of
the
Corporation
Code
specifically
imposes
personal
liability
upon
the
stockholder
actively
managing
or
operating
the
business
and
affairs
of
the
close
corporation.
In
fact,
in
posting
the
surety
bond
required
by
this
Court
for
the
issuance
of
a
temporary
restraining
order
enjoining
the
execution
of
the
assailed
NLRC
Resolutions,
only
Sergio
F.
Naguiat,
in
his
individual
and
personal
capacity,
principally
bound
himself
to
comply
with
the
obligation
thereunder,
i.e.,
to
guarantee
the
payment
to
private
respondents
of
any
damages
which
they
may
incur
by
reason
of
the
issuance
of
a
temporary
restraining
order
sought,
if
it
should
be
finally
38
adjudged
that
said
principals
were
not
entitled
thereto.
The
Court
here
finds
no
application
to
the
rule
that
a
corporate
officer
cannot
be
held
solidarily
liable
39
with
a
corporation
in
the
absence
of
evidence
that
he
had
acted
in
bad
faith
or
with
malice.
In
the
present
case,
Sergio
Naguiat
is
held
solidarily
liable
for
corporate
tort
because
he
had
actively
engaged
in
the
management
and
operation
of
CFTI,
a
close
corporation.
Antolin
Naguiat
not
personally
liable
Antolin
T.
Naguiat
was
the
vice
president
of
the
CFTI.
Although
he
carried
the
title
of
general
manager
as
well,
it
had
not
been
shown
that
he
had
acted
in
such
capacity.
Furthermore,
no
evidence
on
the
extent
of
his
participation
in
the
management
or
operation
of
the
business
was
preferred.
In
this
light,
he
cannot
be
held
solidarily
liable
for
the
obligations
of
CFTI
and
Sergio
Naguiat
to
the
private
respondents.
Fourth
Issue:
No
Denial
of
Due
Process
Lastly,
in
petitioners
Supplement
to
their
original
petition,
they
assail
the
NLRC
Resolution
holding
Sergio
F.
Naguiat
and
Antolin
T.
Naguiat
jointly
and
severally
liable
with
petitioner-corporations
in
the
payment
of
separation
pay,
averring
denial
of
due
process
since
the
individual
Naguiats
were
not
impleaded
as
parties
to
the
complaint.
We
advert
to
the
case
of
A.C.
Ransom
once
more.
The
officers
of
the
corporation
were
not
parties
to
the
case
when
the
judgment
in
favor
of
the
employees
was
rendered.
The
corporate
officers
raised
this
issue
when
the
labor
arbiter
granted
the
motion
of
the
employees
to
enforce
the
judgment
against
them.
In
spite
of
this,
the
Court
held
the
corporation
president
solidarily
liable
with
the
corporation.
Furthermore,
Sergio
and
Antolin
Naguiat
voluntarily
submitted
themselves
to
the
jurisdiction
of
the
40
labor
arbiter
when
they,
in
their
individual
capacities,
filed
a
position
paper
together
with
CFTI,
before
the
arbiter.
They
cannot
now
claim
to
have
been
denied
due
process
since
they
availed
of
the
opportunity
to
present
their
positions.
WHEREFORE,
the
foregoing
premises
considered,
the
petition
is
PARTLY
GRANTED.
The
assailed
February
28,
1994
Resolution
of
the
NLRC
is
hereby
MODIFIED
as
follows:
(1)
Petitioner
Clark
Field
Taxi,
Incorporated,
and
Sergio
F.
Naguiat,
president
and
co-owner
thereof,
are
ORDERED
to
pay,
jointly
and
severally,
the
individual
respondents
their
separation
pay
computed
at
US$120.00
for
every
year
of
service,
or
its
peso
equivalent
at
the
time
of
payment
or
satisfaction
of
the
judgment;
(2)
Petitioner
Sergio
F.
Naguiat
Enterprises,
Incorporated,
and
Antolin
T.
Naguiat
are
ABSOLVED
from
liability
in
the
payment
of
separation
pay
to
individual
respondents.
SO
ORDERED.
Narvasa,
C.J.,
Davide,
Jr.,
Melo
and
Francisco,
JJ.,
concur.